Treasury's Lew Touts Economic Recovery

As a manifestation of budget season, Treasury Secretary Jack Lew was interviewed by CNBC's Steve Liesman about the current state of the U.S. economic recovery. With the 2016 campaign taking shape, although this president is term-limited, the Democratic establishment has a huge stake in keeping the economic recovery looking solid in order to make the case that it took power after the bursting of the housing bubble under the George W. Bush administration, pursued distasteful but necessary policies to get the economy growing again and is poised to restore the economic growth the nation enjoyed under the first Clinton administration.

Opponents will argue that excesses created under the Clinton administration created the conditions that led to the Great Recession of 2008. A popular scenario holds that another Clinton-Bush race is in store in which the second Clinton follows Obama's second term, much as the first Bush followed President Reagan's second term.

Lew said the economy has turned the corner and Liesman asked how he would respond to critics who say this is a "job-killing" recovery. Lew's answer was that growth is taking place in manufacturing and housing, that the deficit is declining, and he threw in a claim that 10 million people have health coverage who didn't have it before.

Liesman tried again and asked what Americans should think who haven't seen the impact of the recovery in bigger paychecks. Lew insisted that wages are increasing, but he acknowledged that more wage growth is needed.

Liesman then tied the wage question to the tax consequences of higher wages, noting that taxes are rising again, "back toward levels the public decided were too high." Lew countered that the rates are only going back to those of the Reagan years when "the economy did just fine," and the top rate is the same as under Clinton, which Lew described as "the longest period of uninterrupted growth in American history."

Lew concluded that the policies the administration has adopted have been tested whereas the economy "did not do very well" in response to the Reagan tax cuts.